Legal Representation Real Estate Closings

Every cooperative and condominium apartment purchase generally requires some sort of board application. Some applications can be very lengthy (particularly co-op applications) while others can be quite simple. Recently, condo applications have become very cumbersome particularly for luxury buildings. Co-op’s have always had some control as to who buys in the building by requiring a detailed board application from the purchaser. But now condominiums have gotten on the band wagon and have started to require very detailed and lengthy applications.

Review the Application:

Before an attorney has a client sign a contract, the attorney should have the client review the application to make sure they can comply with all of the application requirements. This is very important since a purchaser needs to know what documents and fees are required for submission. For example, a co-op may require a letter from the purchaser’s landlord that the purchaser has paid his or her rent on a timely basis (if applicable). If the purchaser has not or cannot get such a letter, it may be an issue. Condominiums have recently been requesting copies of tax returns. Those purchasers who thought that they want to keep their financial information confidential may be in for a surprise. If a purchaser refuses to provide the appropriate paperwork after the contract is signed, they may be held in default by the seller and may lose the down payment.

The following are examples of what might be required in a board application:

  1. Net Worth/Financial Statement
  2. Bank Statements
  3. Tax Returns
  4. W-2 Forms
  5. 401K/IRA Statements
  6. Paycheck Stubs
  7. Reference Letters (Business and Personal)
  8. Employment Letter
  9. Bank Reference Letter
  10. Landlord Letter
  11. Bank Commitment Letter (if financing)
  12. Recognition Agreements (if a co-op)

Review the By-Laws:

It is also important to have the purchaser’s attorney to read the condominium by-laws. There is usually a provision that states that the condominium can request all “reasonable” paperwork from the buyer even if it is not listed on the application. This “catch all” provision can be a surprise for a purchaser.


The other important aspect of the board application is the timing. The co-op contract has detailed provisions on when a board application must be submitted. To the contrary, the standard condominium contract does not provide any substantive details on the board application. For example, the co-op contract provides that if the transaction is all cash, the application must be submitted within 10 business days after the contract is fully signed. This time period is usually pretty tight for many purchasers. The purchaser’s attorney should advise purchaser’s to start working on the application BEFORE the contract is signed. If the ten day period is too difficult for purchasers to meet, the ten day period can usually be push to 15 or 20 days, depending on the time of year (holidays) or vacation schedules.

If the co-op transaction is contingent upon the purchaser obtaining financing, the board application must be submitted within three business days after receipt of the commitment letter. The same timing applies when the co-op purchaser has waived the finance contingency.

The condominium contract form however does impose any time periods. It merely states that the purchaser agrees to promptly provide all applications, information and references reasonably requested by the board. There are no time periods in the printed form of contract. As a result, when representing a seller, the seller’s attorney should add a clause in the contract rider which provides that the purchaser must submit the completed Condominium Board application package within 10 business days after the contract is fully signed. If the Board will not accept the package without the Purchaser’s loan commitment letter, the seller’s attorney should add that the Purchaser shall submit the completed package within 3 business days from the date of receipt of the Loan Commitment but in no event later than 30 days from the date the contract is fully signed. In addition, the seller’s attorney should add that that the Purchaser will agrees that Purchaser shall promptly submit application forms, materials, tax returns, accountants’ certifications, appraisals, and all such other information as the Condominium may reasonably request to secure the waiver of right of first refusal within five (5) business upon request and that the Purchaser shall pay all application, credit report and processing fees associated with the transaction.

It is prudent for the Purchaser to submit the completed purchase application to Seller’s broker for review before said application is submitted to the Condominium, Co-op or the Managing Agent.

Failure To Submit Application:

The Supreme Court Appellate Division decided a case in 1999 that every purchaser or purchaser’s attorney should be aware of: In Glanzer vs Altman, the court decided that the failure to submit a board application within the time period set forth in the contract of sale was a material breach of contract entitling the seller’s to retain the down payment. A purchaser’s attorney should include a provision that the failure by Purchaser to submit the application and/or related materials within the periods of time set forth in the contract, shall not constitute a default under this Contract unless and until such default shall continue for a period of five (5) business days after Seller gives Notice to Purchaser that such a default has occurred and that, if such default is not cured within five (5) business days, such default shall be deemed to be a default under this Contract.


Different co-op’s and condos charge different fees. For example, you may see an application fee charged by the managing agent as well as a processing fee charged by the co-op or condo. There are usually move in fees, move in deposits and credit report fees. Sometimes, the managing agent requires the purchaser to pay messenger fees as well as photocopy charges. Some buildings require a “Pinkerton Report” which can be quite costly (estimate $1,000) and may take 3 to 4 weeks to procure. It is wise to enumerate these expenses in the contract.

Limited Liability Company or Trust:

Some co-ops and most condos allow ownership of the apartment to be in the name of a limited liability company or a trust. Most co-ops will only allow such ownership if the LLC documents or Trust documents are reviewed by the co-op attorney at the Purchaser’s expense. The co-op may require the LLC or Trust to sign a document which provides who will reside in the apartment. In addition, the co-op may require a personal guarantor of the maintenance. On some occasions, the co-op may even require that a year or even two of maintenance charges be held in escrow by the co-op. Needless to say, these extra documents will require an attorney to draft and review at the purchaser’s expense. As a note, several condominiums have also been requesting the foregoing documentation as well.

What Board’s Are Looking For:

Co-op corporations will most likely scrutinize the board application more than a condominium. Co-op look for acceptable carrying costs to income ratio. Carrying costs (annual loan payments and maintenance) should not exceed 28% of the Purchaser’s annual income. Each building uses a case by case analysis. (ex. Income is $100,000 per annum and carrying costs are $35,000 = 35%). In addition, all co-ops will want to see that a purchaser has a significant reserve fund. Many co-ops require that a Purchaser must have a minimum of 18 months of maintenance and loan payments in reserve (this amount may increase or decrease depending upon the economy and the individual building). These funds should be liquid and not in the form of long term investments.

*Nothing herein is offered as legal advice. All information in this article is for informational purposes only. Please consult with an attorney before taking any legal actions.